Jaguar Land Rover announces production in China and India as British factory faces the axe

Jaguar Land Rover today announced plans to build cars in China for the first time - just as it prepares to close one of its three factories in Britain.

The decision has been made by the company's Indian owners TATA, which has put two leading German motor industry executives in charge of running one of the UK's traditional automotive 'crown jewels'.

The luxury car company said it was likely to begin building Land Rovers in China - as well as in India - but 'did not rule out' building Jaguars there too.

Driving east: Carl-Peter Forster, group CEO of Tata Motors, and its vice chairman Ravi Kant at a conference in Mumbai yesterday. The company plans to make Land Rovers and possibly Jaguars in is plants in China and India

Driving the move is a boom in sales in the two key markets which heavily penalise car exports from Britain with heavy tariffs - which disappear if the cars are built in the countries themselves.

Much of the growth came from China, where Jaguar sales rose 38per cent and Land Rover sales rose 55 per cent during the year. The market is also strong in India.

Carl-Peter Forster, chief executive of Jaguar land Rover's Indian parent company TATA Automotive, said: 'We will need to manufacture at least two models in China. We'll take one to two years to set it up, but first we will need a partner.

'In U.S. and China, we are seeing demand returning and we are seeing
increasing sales in the U.S. We are broadening our foothold in China to
further grow the market.'

But he stressed that China or India, would 'never be the centre for Jaguar Land Rover, it will remain in the UK'.

And he insisted: 'Most of the volume growth in these markets will benefit the UK operations.'

However,
the news comes as the axe hangs over two major Jaguar Land Rover plants
in the Midlands - the Land Rover factory in Solihull and the Jaguar
plant in Castle Bromwich, which built Spitfires during the war - one of
which the company says it will shut, with an announcement due this
summer.

Top of the Range: Sales of the ever-popular Range Rover in China and India has prompted the company to look at production in the region, therefore avoiding expensive export tariffs

The Jaguar Land Rover factory at Halewood on Merseyside is safe. Under Ford's ownership, Jaguar closed its historic Brown's Lane factory in Coventry 2005.

Last year, Jaguar Land Rover's workforce in the UK was reduced by about 2,500 people to 14,500 and it supports about 120,000 wider manufacturing jobs.

Mr Forster said: 'We are talking about having one efficient operation rather than two inefficient operations.

'We are not necessarily talking about getting rid of people. We want to grow the business and we want to make sure we can provide jobs for the people.'

But he noted: 'We need to make the business robust, effective and flexible. We will look after our employees as much as we can but there are no jobs guarantees. We need to close a plant to make us more efficient.'

The news to move some Jaguar Land Rover production to China comes as new Prime Minster David Cameron prepares to take delivery of a new armoured flagship Jaguar XJ limousine, to replace the current previous generation model.

Jaguars are the traditional Government fleet vehicle of high ranking Cabinet minsters of all political parties - Home Secretary Theresa May was first to be spotted in the new XJ model in Downing Street - with Range Rovers used as support vehicles.

Transport Secretary Philip Hammond owns his own Jaguar XJ.

Best of British: Jaguars, such as the XJ saloon, are synonymous with British engineering - and limousine versions are favoured by the British Government. But these too could soon be made in China

The company said the move into China is not a shift out of the UK, where it is planning to hire an extra 1,000 workers this year and has plans for adding a string of new smaller and mid-sized Jaguars and Land Rovers to its current line up.

The new jobs that are being created will be temporary and are linked to the production of a smaller luxury Range Rover model - the LRX - due in showrooms next year. A new small Jaguar XE roadster is also in the pipeline.

Mr Forster, an ex-BMW boss who also ran General Motors in Germany and Europe until its recent shake-up said: 'It takes a year or two before the jobs become permanent.'

Tata Motors bought Jaguar and Land Rover from US group Ford for £1.15bn in 2008. At the time the giant Unite union's joint general secretary Tony Woodley warned that production would switch abroad, noting: 'I've been in the car manufacturing business all of my life. Would I always put my life on these vehicles staying here? No I certainly would not.'

The ageing Land Rover Defender, which began life after the Second World War, is the prime candidate to be the first to built abroad, especially in the developing world where its relatively basic engineering is easy to repair.

But the company did not rule out at some point building Jaguars abroad.

Land Rover said it did currently send vehicles in knocked down kit form to India and China, where they are re-assembled.

Jaguar Land Rover has recently seen a big increase in global sales of both its Jaguar models and its Land Rover 4x4 vehicle marque - which includes the Range Rover models.

During the year to March, the company sold 193,982 vehicles and it expects to sell more than 200,000.

It made pre-tax profits of £32m for the year, after two years of losses during the downturn. Mr Forster said: 'It's been a very good year for us.'

Jaguar Land Rover chief executive Ralf Speth, another former BMW executive, said: 'We have a new momentum with Jaguar. A new sports car is coming.'